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The Warsaw Voice » Business » June 3, 2015
Business & Economy
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Polish Firms Venture Abroad
June 3, 2015   
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By 2020 Poland’s exports will have grown by more than a third, and Polish entrepreneurs will be more boldly entering new, previously unexplored markets, according to experts from audit and advisory firm Grant Thornton.

Economic expansion abroad is one of Poland’s greatest achievements since communism fell in this country in 1989, said Grant Thornton in its Foreign Expansion of Polish Companies: Achievements, Ambitions, Prospects report. Polish companies have taken advantage of the opportunity offered by the introduction of a free market and the country’s opening to the global economy. Even though Polish industry and private enterprise were in a difficult situation 25 years ago, they have since gained strength and evolved into a powerhouse in terms of exports.

Over the past quarter of a century Poland’s exports have increased 21-fold (to be specific by 2,069 percent), according to the report. The role of raw materials in the country’s exports has decreased significantly, while the proportion of components and finished goods has increased. At the moment, 60,000 companies in Poland generate revenue from exports, and in 2014 Polish goods were sold in 218 countries worldwide, including far-flung markets such as Equatorial Guinea, the Cocos Islands and Kiribati, according to statistics from Poland’s Central Statistical Office (GUS).

This dynamic expansion by Polish companies on foreign markets will gain momentum in coming years, according to Grant Thornton. The firm’s forecasts suggest that by 2020 Polish exports will increase by 35.6 percent, which means an average annual growth rate of 5.2 percent.

“We expect that two positive trends will overlap,” says Tomasz Wróblewski, managing partner at Grant Thornton in Poland. “On the one hand, the situation on the global market promises to be quite solid; on the other, Polish companies will continue to increase their presence on new markets.”

All the indications are that Polish foreign trade will continue to undergo a process of geographic reorientation in coming years, which means that the importance of new, hitherto little-exploited markets will be growing, while the role of the largest export markets will be declining. “The process of the geographical reorientation of exports has been clearly visible in the Polish economy for several years now, especially since the outbreak of the eurozone crisis, which made Polish companies aware that they shouldn’t focus on one—affluent, but not very dynamic—market, specifically the eurozone, but intensify their foreign expansion to include new, less obvious destinations instead,” says Wróblewski.

Grant Thornton predicts that the role of EU markets in Poland’s exports will fall by 4.4 percentage points in 2014-2020, from 77.1 to 72.7 percent. This does not mean that sales by Polish companies to EU markets will fall. These sales will continue to increase at a relatively fast rate, but sales on many other markets will be growing even faster—and as a result the EU’s share will shrink.

The importance of North and South America as export markets for Poland will increase the most, according to Grant Thornton. The Americas’ share of Polish exports will remain relatively small, but the growth rate will be substantial. In 2015-2020 sales by Polish companies in the Americas will grow by 45.3 percent, Grant Thornton says, as a result of which the Americas’ share of Poland’s total exports will rise from 3.3 to 4.2 percent. This will be primarily thanks to strong growth in trade with the United States, the main export market for Polish goods in that region. Polish companies have been increasingly expanding in the United States for several years now, their exports growing at a rate of more than 10 percent a year. The United States is an ideal destination for Polish exporters in terms of seeking new, non-traditional sales markets. This trend is expected to continue and strengthen thanks to the free trade agreement between the EU and the United States currently being negotiated.

Non-EU European countries such as Norway, Serbia, Montenegro and Belarus are other important destinations that will be gaining prominence in the coming years, according to the forecast by Grant Thornton. Exports to these markets are expected to grow 42.4 percent from 2015 to 2020.

“So far, European countries outside the European Union were largely neglected by Polish companies,” says Wróblewski. “In the first few years after Poland joined the EU, the single European market—which comprised affluent countries and offered minimized bureaucratic barriers to the trade of goods with Poland—was such an attractive option that our companies did not have the motivation to seek customers outside the EU. But now that companies are looking for alternatives to the EU market, regions such as the Balkans, Belarus and Norway are proving to be an ideal destination for expansion. They are close geographically and in addition most are recording faster growth than eurozone countries,” Wróblewski adds.

According to experts from the Polish Chamber of Commerce (KIG), there is considerable potential for Polish companies to expand onto non-EU markets. “Although these markets are more difficult because of cultural differences and sometimes more risky financially, they should become the subject of greater interest on the part of Polish companies, chiefly because so-called emerging markets will drive global GDP growth in the years ahead,” said Andrzej Arendarski, head of the Polish Chamber of Commerce. He added that a presence on foreign markets is vital if the Polish economy is to be more competitive. “If we want to play a significant role in the European and global economy, we cannot focus solely on the domestic market,” says Arendarski. “We must boldly enter foreign markets, including those outside the EU. Taking on foreign competition is the best way of testing whether what Polish companies have to offer is attractive, of putting their business strategies to the test, and consequently determining the best way to further develop companies.”
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